Thursday, October 05, 2006

Some Options, Shuffled

So I’m a little mad at Apple Computer Inc. (AAPL) CEO Steve Jobs. Based on an "internal probe" (boy, that sounds unpleasant), Jobs knew about options backdating that went on between 1997 and 2002. The investigation concludes, however, that Jobs committed "no misconduct."

It's difficult to assess the degree of Jobs’s villainy, or lack thereof. If he gave the OK to pulling option grant dates out of thin air so some execs could get rich(er), that sure sounds like "misconduct" to me. But so far there's not enough information to know if that happened.

In early 2003 Jobs voluntarily relinquished all his unexercised options, 22 million of the suckers. (This was no vow of poverty; the options were immediately replaced with restricted stock that at last count was worth half a billion.) On the one hand, this makes him look cleaner because he didn't profit from the backdating. On the other hand, since from time to time he purports to have a conscience, I can't help wondering if guilt about backdating inspired him to throw the darn things down the toilet. Speaking of toilets, the company's lousy stock performance had rendered the options mostly worthless, so he made no financial sacrifice. But other Apple execs did hang on to theirs in the hope they'd eventually pay off.

Jobs's explanation, per the 2003 proxy, was that he wanted to "build shareholder value by reducing the Company's overhang." I have no idea what this means, but the man is a genius, so why should I.

The reason I’m mad at Jobs has nothing to do with this. My beloved iPod Shuffle, just over a year old, has started to skip when I'm jogging. For that, Mr. Jobs deserves a good “internal probe.”